Sun Microsystems was known for the slogan "the network is the computer" for years, even before the Internet hit the mainstream. So its absence from "cloud computing," the buzzword of the year, was rather notable.

The company said it's taken steps to reverse that, bringing its considerable hardware, software and expertise to bear on cloud computing projects.

Sun (NASDAQ: JAVA) certainly is not lacking for technology. It has powerful hardware, the xVM virtual machine as the base for running Windows, Linux and its own Solaris operating system, multiple enterprise file systems like Lustre and ZFS, an open storage technology, and Java, MySQL and Glassfish for the software layer.

This isn't Sun's first stab at such a project. In 2005, it launched the Sun Grid, offering server capacity at a flat fee of $1 per CPU per hour and 1GB of storage for $1 per month. While it drew some customers, it didn't set the world on fire. This new project is destined to be more complex than offering server space.

Dave Douglas, the director of Sun's cloud computing business unit, said one of the changes instituted by the company's recent reorganization was to set up a cloud strategy. CEO Jonathan Schwartz asked Douglas to begin the strategy last summer, he said during a briefing with the press. Douglas assembled a team of cloud engineers, including the unit's new chief technology officer Lew Tucker, who had previously been with Salesforce.com.

Three layers of cloud computing

Sun identified three layers of cloud computing: software as a service, platform as a service and infrastructure as a service. Sun felt there would be work done in all three layers and companies will gravitate toward where they have needs.

Application clouds are different based on work, so a high performance cloud would be different from a Web services cloud. "So some clouds will be different than others. These many different layers will mean many different clouds," said Douglas. "There's not going to be just one cloud and everyone is going to use it."

Douglas said Sun expects to play across a wide range of cloud offerings, where Sun provides a large amount of content to one customer or very little in another case. "We want those values of openness and compatibility to be coming through in every one of those cases," he said.

"Why do we think we're the right people for the job?" he continued. "The idea of openness is critical to the cloud space. This is at the core of our DNA. We know how to make that happen. We have a very rich portfolio that applies directly to this space."

There certainly is opportunity. IDC estimates that about $16 billion will be spent worldwide on cloud computing services in 2008, growing to $42 billion by 2012. Over the same period, cloud computing will grow from four percent of the total IT spend this year to nine percent in 2012, and that's with the economic slowdown.

However, IDC analyst Jean Bozman said Sun has not shown all of its cards yet. "What [this announcement] does is, it's pulling together things that Sun is already strong at. They probably should have done this a lot sooner," she told InternetNews.com. "They have all the pieces to make cloud computing work and have relationships with service providers to do it."

Bozman said it appears Sun has a multi-layered strategy for how they will go to market. For now, she said Sun is trying to position itself as a player because "they have some announcements they are not prepared yet to make." She expects more news from Sun next month filling out its strategy.